Efficiency and speed are crucial for the logistics industry. Customers are looking for fast and cheap shipping, so companies do their best to develop strategies to meet these needs. Cross-docking is an effective logistics strategy that can be seen as a way to streamline the process. But will it work for our specific company? This post explains more about this method and where it is best applicable.
Cross docking explained
Cross-docking is a logistics strategy that speeds the flow of goods through the supply chain. A cross-docking warehouse is a specialty designed to accommodate and speed up the process. Everything starts when the inbound truck arrives at the facility. The goods are unloaded from the vehicle and directed to the outbound vehicle without being stored between transportation. At that point, the goods will be sorted and consolidated.
The whole process happens so quickly. The products will be moved and sorted within 24 to 48 hours, which is very beneficial. In some cases, cross-docking might be used interchangeably with translating, which refers to the movement of shipments from one means of transport to another. The difference is that cross-docking refers to moving the goods from one truck to another while cutting down the need for warehousing.
Benefits of cross-docking
Cross-docking is known for its advantages, such as reducing delivery time and cost-effectiveness. This is very important for the high-volume shipping companies that want to reduce the costs and deliver the goods quickly.
In the facility, the workers consolidate goods from different suppliers and move them to the outbound vehicle that arrives at the final destination. With this, there is no need to store the goods, eliminating the need for a warehouse.Â
Cross-docking speeds up order fulfillment, making it easier to reach the customer faster. As a result, this practice helps improve customer satisfaction. Cross-docking is very beneficial for international shipments headed to Mexico and Canada.
Despite reducing transportation costs, this method simplifies customs compliance paperwork and border fees. Shippers will consolidate all the pallets into one shipment and get one document instead of several separate documents for the different pallets.
Eliminating the need for warehousing will result in cost savings. Operating a warehouse can be very expensive for the company. It comes with owning costs such as rent, labor, utilities, and maintenance. The cross-docking process reduces the final shipping costs by cutting down the warehouse needs. This not only saves money but also speeds up delivery. The workers transport the goods quickly to the outbound vehicle, a process that happens often in less than 24 hours. The traditional logistics process includes unloading the freight, scanning the inventory, and storing it in a warehouse for a long time. The cross-docking process speeds up the delivery by receiving and quickly consolidating the cargo.
Challenges of cross-docking
Cross-docking comes with many challenges, but if companies manage to overcome them, they can harness the power of this logistics method. While it can contribute to cost savings, cross-docking can increase the shipping costs for some companies.
For this method to be cost-effective for the company, they need to work with a large volume of goods. Also, precision and planning are highly requested with cross-docking. Things might not always be perfect. In a case where the inbound and outbound transport is late, this can result in interruptions, which lead to delays in the final delivery.
Also, another challenge is visibility. Since the workers won’t scan the products, shipment updates won’t exist. Also, cross-docking facilities might be unable to accommodate freight with special packaging or handling needs.